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Republican Health Care Reform: An Overview

Once Senator-elect Scott Brown from Massachusetts is sworn into office, Republicans will have an unstoppable filibuster machine in place (assuming they remain united). It takes 60 Senators to shut down a filibuster. With a caucus of 41, Senate GOPs can kill most any bill on the table. (Budget related items can be moved forward through the reconciliation process with only 51 votes).

Which means when it comes to health care reform, Republicans have a choice: they can kill most any bill or they can help pass reform legislation that includes some of their pet provisions. For much of the health are reform debate it was unclear what was the Republican health care reform proposal. There were plenty of ideas thrown around by various groups of GOP lawmakers, but there was no one generally agreed to set of reforms. To be fair, it wasn’t clear what reform provisions were part of the official Democratic recipe either: liberals had their ingredients; moderate Democrats had ideas of their own.

For Democrats it’s fair to say that somewhere between the bill passed by the Senate and the one passed by the House lies their health care reform proposal. Republicans have their own legislation, the “Common Sense Health Care Reform and Affordability Act.”. While this legislation has never been considered by a Congressional committee (that I’m aware of) based on the the Republican response to President Barack Obama’s State of the Union address by Virginia Governor Bob McDonnell, it appears to be the “official” GOP plan. What Governor McConnel said is that “many of (the Republican’s health care reform) proposals are available online at solutions.gop.gov.” As Governor McDonnell was speaking on behalf of the Republican Party, and since the web site he referred to an official Republican Party site, I assume it’s fair to consider the legislation and the web site as the official GOP position on health care reform.

So what kind of health care reforms would Republicans say “yes” to?

Require states to operate “qualified” state reinsurance programs and high risk pools to enable individuals with pre-existing conditions to obtain coverage so long as they are “citizens and nationals of the United States.” Aliens legally in the United States would apparently not be eligible.

$25 billion would be allocated to the help fund these programs.

Premiums could be no higher than 150% of the state’s average individual health insurance premium

Preventing carriers from imposing pre-existing conditions on consumers if they maintain continuous coverage.

In describing this provision, Republican staff of the Ways & Means Committee describe this provision as extending “existing HIPAA guaranteed availability protections.” Among the extensions is eliminating the requirement that individuals exhaust their COBRA coverage before becoming eligible for insurance under HIPAA.

Prohibiting rescissions except in cases of fraud and even then consumers can appeal the decision to an independent appeals panel.

Offering states incentives for:

reducing “the average per capita premium for health insurance coverage” in the individual and the small group markets.

reducing the number of uninsured in the state by specified percentages

Permitting states to “contract with a private entity to develop and operate a plan finder website” to provide information on individual coverage available to consumers in that state. These state plan finders are explicitly prohibited from directly enrolling individuals in health insurance plans.

Allows small business to come together in Association Health Plans that operate across state lines.

Allows individuals to purchase coverage from any health plan licensed in any state. Insurance from a health plan licensed in another state will “still be subject to the consumer protections and fraud and and abuse laws of the policy holder’s state of residence” according to the Ways & Means Committee GOP staff.

The rationale for this provision, as stated by those Republican staffers, is that “differences in state regulation of health insurance have resulted in significant variance in health insurance cost from state to state. Americans residing in a state with expensive health insurance plans are locked into those plans and do not currently have an opportunity to choose a lower cost option.”

Encourages use of Health Savings Account by allowing them to be used to pay for health insurance premiums, enabling those receiving a nonrefundable tax credit to contribute to an HSA and the like.

Capping malpractice awards for noneconomic damages to $250,000 and other medical liability reforms.

Eliminates a current comparative effectiveness research initiative aimed at identifying the effectiveness of various medical procedures

Providing incentives for prevention and wellness programs

These are the primary provisions. There are others aimed at combating fraud and abuse in government health programs, preventing federal dollars to be used for abortions and the like, but these are the core elements related to access and affordability.

Some of the Republican health care reform bill is relatively non-controversial. Who opposes encouraging prevention and wellness programs? The Republican health care reform proposal’s impact on the uninsured would be minimal, according to the independent Congressional Budget Office. However, the CBO also found that the GOP reform plan would “reduce average private health insurance premiums per enrollee in the United Sates, relative to what they would be under current law- by 7 percent to 10 percent in the small group market, by 5 percent to 8 percent for individually purchased insurance, and by zero to 3 percent in the large group market.”

My point in describing the Republican health care reform proposal is not to applaud or criticize it (that’ll happen in future posts). Nor is it to imply that this legislation has any chance of being enacted.

But on the off-chance that both President Obama and the GOP are serious about negotiating over health care reform legislation, it’s useful to know the parameters of the discussion. The Senate bill, with the expected modifications as reported in this blog and elsewhere over the past few weeks, represents the starting point for Democrats. The Common Sense Health Care Reform and Affordability Act represents the starting point for Republicans.

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10 thoughts on “Republican Health Care Reform: An Overview”

The idea that the types of treatments and options available are solely between a patient and doctor is false. The biggest deciding factor for many is the insurance company. They will dictate who you can see (who is in-network) and what you can get (what is covered/ doesnt this seem like rationing?). If you don’t like it then be willing to pay the full price up front (which most Americans will not be able to afford).If insurance corporations are able to unanimously raise prices within states (defying the concept of competition) and reduce benefits to “maintain” profit then why would they not be able to do this on the national scale and become larger corporate players that make small insurance start-ups struggle to compete?. Would we not then get the “Apple” and “Microsoft” of health care insurances who dominate the market and whose products are only available to those who can pay the retail price? Sure you might get a splurge of competition in the beginning but over time as we can see in the market today, the development of mega-monopolies are inevitable especially with an industry that makes up a large portion of the economy. Opening up state lines in theory help small-business but we are forgetting that there are large players who can dominate the market. This in the end does not help small-insurance startups. These small-startups will have difficulty setting up contracts with various practitioners across the nation and whereas larger corporations will have a much easier time. Thus larger corporations will increase their control of the total market and stifle any potential competition. The solutions provided by both parties to our health care leave many cracks. The only difference between the two are who falls in and gets neglected.

As I have written before, I am not in the Health Field so maybe I am missing something here. I do not see how the GOP plan will reduce medical costs; and if the plan cannot reduce medical costs, logic would dictate that the plan cannot reduce the cost of premiums.
The Democrats proposal for mandated coverage was the driving mechanism behind reducing costs. I do not believe this to be an idealogical statement, but rather a statement of fact.
In addition, the proposal to eliminate studies on comparative research further impedes the ability to control costs. While a number of your readers’ may believe comparative effectiveness is code for rationing, the fact is that, in the pharmaceutical field, too often marketing and not science is driving medical decisions (see attached link).
Moreover, while it seems like a great idea for someone from New York or California to purchase insurance from a company in Arkansas, good luck in finding a provider who will honor that policy. Along this same line, I am sure that a large percentage of Health Insurance Companies already have a presence in the individual States and the premiums reflect the cost of coverage in the individual States. In fact, this proposal more than anything else will probably eventually lead to a Nationwide Healthcare System.
As far as malpractice reform goes, I have read the GOP proposal and as I have written here before, I do endorse their proposal for Alternative Dispute Resolution.

Why is it ok for the government to do “comparative research” but if insurance companies try and do their version of comparative research, then they are getting in the way of you and your doctor and the “evil” CEO’s and insurance companies are just trying to deny benefits. Right now, Insurance companies are the ONLY ones doing anything and trying to keep HEALTH CARE COST down. But every year the gov adds another state mandate and forces insurance companies to cover tests that may or may not actually help. How are doctors and hospitals trying to reduce costs? They are negotiating with insurance companies to try and get their reimbursement rates increased, not lowered. Where are the people who are mad at the “Greedy” doctors and hospitals. You never hear that. Guess they are not an easy target like insurance companies…. The many, many more americans that are helped by what the insurance company does for them and what they have paid for them, never make it to the sound bites. I hear about them ever day. HMO’s have been trying to negotiate lower rates, capitate doctors, labs and hospitals, do whatever they can to try and bend the cost curve and they have been villified for it. They were trying to tell doctors what they can and can’t do…..People need to wake up and open your eyes, you can’t have it both ways. You can’t let doctors and hospitals do whatever they want, and charge whatever they want, but then get mad when costs go up. Doctors and hospitals want to profit as high as they can get also……and that’s not such a bad thing if we want good ones.

I don’t know why you think mandated coverage reduces medical costs – it doesn’t. It will increase total spending.

Now, it might reduce the average pure premium of those who pay for an insurance policy, since people who were getting service free before (through ER’s and such) would now be paying for it. However, those same people’s utilization will go through the roof. While some services they previously used will be less expensive, this is more than offset by new services that more than make up the difference.

I did some very quick research on how mandates affect premium costs. I looked that at the cost of healthcare insurance in Massaschusets since mandated coverage was enacted in 2006. As can be expected claims for the the success or failure of the program will be based on partisan lines so I chose a simplified look at the plan as outlined by the Kaiser Foundation (see link).
According to Kaiser, the primary objective for the first year was expanding coverage; cost containment was a secondary goal and as can be expected if cost containment is ignored medical costs will rise. How much of the rise in costs can be attributed to expanded coverage depends upon an individual’s particular view of mandated coverage and on what political spin they choose to adopt . However, one point that I believe is indisputable is that mandatory coverage does stress State budgets. I had made a similar point in a previous post.
Getting back to the MA plan, the focus during 2008 turned towards the issue of cost containment and I believe that some of the programs that Allan wrote of in his most recent post are included in the cost containment measures currently being studied in MA.

I currently pay $1711.50 per month in the “individually purchased insurance market.” Next year’s price is set to be announced in March–it is possible it could stay the same, and it is even possible it could go down.

It is possible that pigs will fly, too.

In recent years, it has been going up by over 10 percent per year.

But for the sake of argument, let us assume that this will be the first year since I took out the policy for my family in 1984 that it doesn’t go up.

How will my 5-8 percent predicted decrease affect my premiums?

It will go down to $1574.58 ($18,894.96 per year) to $1625.93 ($19,511.16 per year).

Already, because of the cost of insurance and the out-of-pocket medical bills, my adjusted income is hovering at the point where — if I made just a little less each year — I could qualify for a state-aided program that costs $328 per month ($3936).

Now I manage to pay several different independent contractors for various jobs such as transcribing interviews and editing.

But it is clearly in my self interest to work less and qualify for the state-aided policy. I will feel bad about not being able to farm out work to anybody else, but I will come out at least $10,000-$12,000 ahead if I become a slacker.

The G.O.P. pays lip service to helping small business and entrepreneurs, and perhaps on some level, there are those who benefit. But from my perspective, the real beneficiaries of the G.O.P.’s penny-wise, pound-foolish approach to healthcare are the mega corporations who benefit from the best rates per employee–and an ability to retain employees because of the latter’s fear of becoming uninsured if they leave the company to start their own business.

This may seem a little tangential, but there was a fascinating study in today’s New England Journal of Medicine on how the “pennywise” philosophy, especially in an elderly population suffering chronic ailments, is profoundly “pound foolish”–resulting in much, much higher costs in the long run.

I have read that private insurance companies know that they are unlikely to retain customers for lengthy periods of time because of job changes and the like, and thus do not want to invest in wellness and prevention efforts now that are likely to only reduce the future costs of a competitor.

Anyhow, this is why the focus on a patient’s relatively short-term health, which seems to me the case with both for profit and non profit insurers, is yet another reason the system is broken.